Despite all of the business media’s frantic, recent warnings about electric-vehicle sales collapsing, the actual data tells a radically different story. Specifically, last quarter EV sales in the United States jumped 50% versus the same period a year earlier to 313,000. Moreover, Tesla’s (NASDAQ:TSLA) share of the U.S. EV market tumbled to 50% from 62%. All of those statistics are great news for EV charging companies and EV stocks. Of course, with many more EVs on the roads, the demand for charging stations that EVs can use during long journeys will surge. However, Tesla, of course, has its own large network of charging stations.
Therefore, as the number of EVs on the roads made by companies other than Tesla jumps, the demand for chargers owned by independent firms will also climb. More importantly, in 2024, government subsidies for the rollout of new EV chargers are expected to finally go out the door. This will benefit many EV charging companies and lifting EV charging stocks.
EVgo (EVGO)
EVgo’s (NASDAQ:EVGO) revenue soared 234% in the third quarter versus Q3 of 2022 to $35 million. The increase shows that the demand for the company’s EV chargers is soaring. And, providing further evidence of that trend, the amount of electricity generated by its chargers jumped 208% year-over-year to a record 37 gigawatt hours. Finally, it added more than 106,000 new customers in Q3.
EVgo also obtained an important new partner, Honda (NYSE:HMC), in Q3, with the Japanese automaker providing its customers “with direct access to EVgo’s public fast charging network”, and giving the owners of its EV models a $750 credit for EVgo stations. Also noteworthy is that in Q3 the company “operationalized the first fast charging sites” under its partnership with General Motors (NYSE:GM) and Pilot which owns gas stations and convenience stores.
I believe that EVgo’s impressive array of partnerships will prove to be instrumental in enabling it to continue to grow very rapidly and becoming profitable sooner rather than later.
Chargepoint (CHPT)
Chargepoint (NYSE:CHPT), the large EV charging network company, issued a very disappointing preannouncement and disclosed that it had hired a new CEO on Nov. 16.
The firm announced that it expected to report Q3 revenue of between $108 million to $113 million for Q3, down about 6%-10% versus the $119 million of sales that it generated in Q3 of 2022. Analysts, on average, had expected the firm to generate sales of $150 million to $165 million.
The company blamed “Overall macroeconomic conditions, along with fleet and commercial vehicle delivery delays” for the disappointing sales.
Indeed, high interest rates and all of the negative publicity about EV penetration in the U.S. likely played key roles in hurting the company. Since ChargePoint is largely dependent on convincing other firms to purchase its chargers, it’s more vulnerable to macroeconomic issues than EVgo which uses more of a direct-to-consumer approach.
Still, over the longer term, interest rates will drop and businesses will start to realize that EV sales are actually growing quite rapidly. Moreover, the company has nearly $400 million of cash and access to another $150 million of credit.
Also noteworthy is that nearly 75% of analysts still rated CHPT stock a “Buy” as of Nov. 17.
With its Q3 revenue expected to come in meaningfully above its cash-based operating expenses, the company looks poised to be able to stay afloat without raising additional funds until its situation improves.
Further, CHPT stock is now changing hands for about 1.5 times its annual sales, assuming that the company’s revenue remains unchanged from its Q3 level. That’s a very cheap valuation.
Tritium (DCFC)
In September Tritium (NASDAQ:DCFC) reported strong results for the first half of the year, as its revenue soared 286% versus the same period a year earlier to $112 million.
Moreover, Tritium’s gross margin turned positive in the first half, coming in at 4% and well above the gross loss of 22% that it reported in the same period a year earlier. The large increase suggests that the company is moving rapidly towards profitability.
And Tritium has two, very impressive customers: oil giant BP (NYSE:BP) and Australia’s “largest public fast charging network.”
Although Tritium reported that its orders dropped to $56 million in the first half of 2023 versus $105 million in the same period of 2022, it expects its orders to surge in the back half of the year. In fact, the company noted that it had already obtained multiple, large orders between July 1 and Sept. 20.
Finally, the firm has a miniscule trailing price-sales ratio of 0.16, making the shares’ valuation very attractive.
On the date of publication, Larry Ramer held a long position in EVGO. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
